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Business Combination

3 Months Ended

Mar. 31, 2024

Business Combination

Business Combination

10.	Business Combination

On February 7, 2024, SG DevCorp entered into a Membership Interest Purchase Agreement (“MIPA”) to acquire Majestic World Holdings LLC (“Majestic”). The aggregate consideration payable by SG DevCorp for the outstanding membership interests (the “Membership Interests’) of Majestic consists of 500,000 shares of SG DevCorp restricted stock (the “Stock Consideration”) and $500,000 in cash (the “Cash Consideration”). The MIPA and a related side letter provide that the aggregate purchase price be paid as follows: (i) the Stock Consideration was issued at the closing (the “Closing”) on February 7, 2024; and (ii) 100% of the Cash Consideration will be paid in five equal installments of $100,000 each on the first day of each of the five quarterly periods following the Closing. In addition, pursuant to a profit sharing agreement entered into as of February 7, 2024 (the “Profit Sharing Agreement”), SG DevCorp agreed to pay the former members of Majestic a 50% share of the net profits for a period of five years that are directly derived from the technology and intellectual property utilized in the real estate focused software as a service offered and operated by Majestic and its subsidiaries. In accordance with ASC 805, the Majestic acquisition is accounted for as a business combination. The Majestic acquisition was made for the purpose of expanding SG DevCorp’s footprint into technology space.

The purchase consideration amounted to:

	Cash	$	500,000
	Contingent consideration payable		945,000
	Equity consideration		435,000
		$	1,880,000

As part of the Majestic acquisition, the Company recorded a contingent consideration liability for additional payments pursuant to the Profit Sharing Agreement. The initial contingent consideration liability of $945,000 was based on the fair value of the contingent consideration liability at the acquisition date, and is payable in cash.

The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed for the Majestic Acquisition:

	Cash and cash equivalents	$	1,082
	Intangible assets		100,468
	Goodwill		1,810,787
	Accounts payable and accrued expenses		(32,337	)
		$	1,880,000

As of March 31, 2024, the Company has not completed its measurement period with respect to the Majestic acquisition. The amounts above represent provisional amounts recorded at this time and are subject to adjustments once the measurement period has ended.

Below is a proforma condensed consolidated statement of operations for the three months ended March 31, 2024, as if the Company purchased Majestic as of January 1, 2024. A proforma condensed consolidated statement of operations for the three months ended March 31, 2023, is not presented because during that period there was no activity in Majestic.

		For the Three Months Ended March 31, 2024
		(Unaudited)
	Revenue:
	Sales	$	121,808
	Total		121,808

	Operating expenses:
	Payroll and related expenses	$	2,016,087
	General and administrative expenses		587,488
	Marketing and business development expense		69,150
	Total		2,672,725
	Operating loss		(2,550,917	)
	Other expense:
	Interest Expense		(565,996	)
	Other Income		—

	Net loss	$	(3,116,913	)